Europe plea emphasises Brown rift

Britain must "engage more deeply" with Europe, Mr Blair told the conference, underlining his divisions with Gordon Brown over the issue.

The Prime Minister also said Britain had important allies in the European Union in pursuing the case for economic reform, contrary to the impression given recently by Mr Brown.

In an article for The Daily Telegraph this month, the Chancellor portrayed himself as a Eurosceptic, attacking the "rigidities, inflexibilities and lack of competitiveness" of other EU economies. He contrasted the rest of Europe with the more open economies of Britain and America.

But yesterday Mr Blair suggested it was wrong to portray Britain as isolated in the EU. "We have a string of reformist EU presidencies ahead - including those of Italy, Ireland, the Netherlands, and our own in 2005," he said.

The Prime Minister also assured the CBI that, in the negotiations on the new EU constitution, he would refuse to surrender the British veto on matters of tax, social security and Europe's budget.